New Economic Models for News Organizations: Panel

October 8, 2008 | By Donna Leinwand

CHAPEL HILL, N.C. – New ways of raising revenue will be developed to support the news business, leading North Carolina journalists said at a NPC here Tuesday.

The two mistakes that have been made to far with Internet news are the idea that news is free on the Internet and that the price of advertising should be based on the television model – how many eyeballs see an ad, said Penny Muse Abernathy, a University of North Carolina professor of digital economics.

That will change, she said.

“You will have business models that emerge that take advantage of information that just can’t be free,” she said. “As you see the Internet mature, the big game changer in advertising is that it is not just a passive push but an interactive thing.”

Advertisers will understand that Internet advertising doesn’t just tell people about products, she said, but that it can be used to close deals. That is worth more money.

Abernathy was speaking at one of the National Press Club’s forums on “The First Amendment, Freedom of the Press and the Future of Journalism” that the Club is holding around the country to mark its 100th anniversary. At each forum, the Club gathers a panel of leading local journalists to talk about where the news business is going and how to protect its core values.

Orage Quarles, publisher of the Raleigh News and Observer, said fighting the present economic reality is impossible for the news business, but that doesn’t mean that good journalism can’t be done.

“We told ourselves we had to deal with the economics that are real for us,” he said.

The newspaper had grown fat and had added a lot of staff because classified advertising had boomed during the past 30 years, he said. But now, because of the Internet and the economic downturn, classified revenue has nearly dried up.

In 1975, the newspaper had 400 employees and put out a good product, he said. In 2000, it peaked with 1,200 employees. Today, it has 750 employees.

“We are not going to give readers any less information,” he said. “And because of the Internet, even though our circulation is down slightly, our readership is up.”

The notion that a television station transmits news and entertainment on one channel is becoming “quaint,” said Jim Hefner, former vice president and general manager at CBS affiliate WRAL-TV in Raleigh who now teaches at UNC.

While the Internet has not caused a fundamental change in the television economic model, like it has for newspapers, television stations will face their own revenue problems when political advertising ends in November. To maintain growth, he said, TV stations must embrace new technology.

“They are a production facility that happens to own a television station,” he said. “They also have an Internet site. They also have a position in mobile (communication). Hopefully, if they are smart, they have a position in radio … and they have an alliance to provide their product to someone else.”

The smart players, he said, “are going to be in it all.”

Deborah Potter, executive director of NewsLab, a non-profit journalism resource in Washington, D.C., said that despite protests of many journalists about the dangers of having lay people report news through blogs and i-reports, citizen journalism is here to stay.

“It’s a cautionary tale,” she said. “But I don’t think we are going to be ignoring the possible contributions of individuals to the news. There are many more people out there, all of them are equipped with video cameras on their cell phones. But it does raise the bar for what news organizations have to do to verify information and do it in real time, which is the biggest challenge of all.”

The next National Press Club Centennial Forum is today, Oct. 8, at the University of South Carolina in Columbia.